Bruno Le Maire broadcasts a downward revision of France's progress forecasts | EUROtoday

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The Minister of Economy and Finance, Bruno Le Maire, introduced on Sunday February 18 a downward revision of France's progress forecasts for 2024, from 1.4 to 1%. This implies a “immediate effort of 10 billion euros in savings” this yr, he added, invited to the 8 p.m. tv information on TF1. Mr. Le Maire assured that the chief would launch these billions of euros in financial savings on State spending, committing “like for seven years” to not enhance taxes.

This new progress forecast “takes into account the new geopolitical context”defined the Minister of the Economy, evoking on the identical time the battle in Ukraine, the Middle East, the “very marked economic slowdown in China” And “a recession in 2023 in Germany”. Paris additionally maintains its goal of reducing the general public deficit to 4.4% of gross home product (GDP) in 2024.

Before his announcement, Bruno Le Maire reiterated that this goal appeared much less and fewer achievable. “I will have the opportunity to clarify our economic strategy and our public finance strategy with the President of the Republic and the Prime Minister in the coming days”he declared Thursday. “I believe, over the past seven years, that I have demonstrated clarity and firmness on these subjects each time. »

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The Organization for Economic Co-operation and Development (OECD) is the latest economic group to have lowered on Monday, to 0.6%, its estimate of growth of France's GDP for this year. It followed in the footsteps of the International Monetary Fund (IMF), which is now counting on an increase of 1%. The Banque de France forecasts 0.9% while a consensus of economists surveyed by the Bloomberg agency expects 0.7%.

A clear slowdown

In 2023, Bruno Le Maire had thwarted the most pessimistic predictions. Growth had reached 0.9%, according to INSEE, a level very close to its anticipation, i.e. 1%. But this resistance from the second economic power of the euro zone, in a context of still biting inflation and strong geopolitical tensions, masks very divergent developments in GDP: a second quarter in growth (+ 0.7%), the three others stagnating.

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The slowdown is obvious. Activity in 2024 is caught up by the increase in interest rates decided to counter inflation, but which weighs on investments by businesses and households. And in Europe, the German neighbor is doing badly. With notably a slowdown in inflation, the main support for economic activity would lie in a – moderate – increase in household purchasing appetite.

INSEE forecasts growth of 0.2% for each of the first two quarters of 2024. With growth overhang estimated at 0.5% at mid-year, GDP growth of 1.2% would be required in the third. quarter as well as in the fourth to reach 1.4%, which the government predicted. It is ” a lot “we note at the statistical institute.

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Lower progress will complicate the troublesome train of restoring public funds, which the federal government has declared as a precedence. Rather than tax will increase, it’s relying on a surplus of exercise in addition to appreciable financial savings to cut back a debt of greater than 3,000 billion euros and scale back the general public deficit to 4.4% of GDP in 2024 (in comparison with 4.9% anticipated for 2023), then under the European restrict of three% in 2027. After the top of remarkable disaster assist this yr, the target is to avoid wasting a minimum of 12 billion euros per yr from 2025.

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The World with AFP